CGI has opened up the independent comparative rating market with a single rating source and rating service that benefits insurance companies, comparative rating firms, independent agents and customers. Rating algorithms at insurance companies are no longer only for batch processing or online quoting directly by their own agents. They can be accessed by intermediaries in a timely and secure manner. Online, real-time, Web-based rating information is now available like never before possible.
Introduction
Converting property and casualty online insurance quotes into policies is not likely to happen if:
• there is a significant discrepancy between the online quote and the actual policy premium;
• the insurer’s product does not reach the market in time to be competitive; or
• the insurance company’s rating information is not interpreted accurately and kept current by comparative rating companies.
What if independent agents had free, direct access to an insurance company’s rating information over the Internet through a single authoritative source? The insurer’s information would not be interpreted by third parties. Independent agents would always get the right information to pass on to their customers. The insurer’s product changes would take effect immediately.
As a result, the insurance company would:
• lower its operating costs;
• gain greater business agility;
• accelerate its products’ time to market;
• improve quality and durability of its products; and
• enhance the organization’s credibility as a fair insurance company.
This CGI white paper describes the alternative that now exists to apply cost-effective technology that stops the re-interpretation of an insurer’s rating and lets the most accurate information flow smoothly between independent agents and a P&C insurance company via real-time Web-based access to a single source for rating.
Comparative Rating for the Insurance Industry
Insurance companies now have a choice they have not had before. They can keep the status quo and send out their rating manual to the comparative rating companies who in turn interpret and implement the manual themselves and deploy the rating when requested by an agent. Or, by giving comparative rating firms and independent agents easy, direct access to their rating information, insurers can eliminate this current middle step of having their rates and rules interpreted by another party.
Clearly, the status quo presents problems for insurance companies, for raters, for the independent agents and ultimately for the prospective customers. All are affected when the comparative rater works from outdated information or inaccurately interprets the information from the insurance company. All are affected when new information from the insurer – such as a territory’s rate change – is delayed by weeks by comparative raters too busy for timely updates to information. Neither is it to anyone’s benefit when the interpretations of rates vary between comparative rating firms or online quote-generating firms. With multiple rating engines and numerous comparative rating systems engaged in proprietary coding, there are many opportunities for discrepancies and complaints. Even in a perfect situation, with no misinterpretations and when the comparative rater is very quick at implementing the carrier’s rating changes, discrepancies in premium occur due to the lag-time between when the carrier implements the change and when the comparative rater does. Insurers are distanced from customers by a middle step that lacks any way of measuring its effectiveness. Suffice to say that many insurance companies get many "hits" for quotes, but the percentage of conversion of quotes to policies is often extremely low. Significant discrepancies between quote and issue are a customer disservice and have an impact on
how competitive a company is perceived to be. It is time-consuming for insurers to track down faulty interpretations of their rating algorithms. Further, the more complex products are, the longer their adoption time by comparative raters. Comparative raters need more direct access to the insurer’s rating information. Now the technology exists – and has been proven – to provide an efficient, cost-effective solution. That solution is a rating service based on an accessible, single authoritative rating source at the back end of the insurer’s systems. CGI can provide its Ratabase® clients with just such a solution.
Ratabase is a long-established rating solution for managing rates and rules within insurance company systems. Its architecture allows insurers to build business logic once and distribute it to a variety of platforms. Its many users have found the resulting access to business and rating logic has improved productivity, reduced costs and enhanced users’ ability to integrate new technology into their business strategies. Ratabase is designed with portability in mindso it is easily deployed to new environments. Using Ratabase, an insurance product (rating program) can be built in the Windows based Ratabase Product Builder and then deployed to a mainframe, Unix or Microsoft Windows production environment.